Former California State Treasurer Phil Angelides has joined forces with ex-basketball star Earvin "Magic" Johnson and a Beverly Hills investment firm to buy and improve more than $2 billion worth of urban apartment complexes across the country.
Angelides said Monday that he was chairman of the newly created Canyon-Johnson Urban Communities Fund, which will focus on acquiring and upgrading apartments in inner-city neighborhoods to create more "workforce" housing.
Such housing for sale or rent is intended to serve families that have moderate incomes but still have trouble finding places they can afford to live in the cities where they work.
"We are not doing luxury lofts," Angelides said. "We are talking about secure housing for firefighters, police officers, clerks -- people who are the backbone of our communities."
Urban planners in recent years have tried to encourage the creation of more workforce housing because rising home values have driven many middle-income workers out of the city, often forcing them into long commutes to their jobs and changing the character of neighborhoods they leave behind.
"In high-cost areas like Los Angeles and Southern California, workforce housing is critically needed," said Con Howe, managing director for CityView Los Angeles Fund, which finances construction of such housing and is not connected to Angelides.
Canyon-Johnson's plan "adds the rental piece to what others are doing in for-sale product," Howe said.
The fund expects to raise about $1 billion from pension funds, endowments and other institutional investors, said Bobby Turner, managing partner of Canyon Capital Realty Advisors, the Beverly Hills investment firm. That money will be used to leverage purchase of more than $2 billion worth of apartments with about 10,000 units starting this spring.
Older complexes with more than 150 units will be targeted in Los Angeles, the Bay Area, Chicago, Washington, New York and Boston, Turner said.
Buildings will be spruced up with new amenities such as swimming pools and recreation rooms. They will also receive "green" improvements such as solar heating and energy-efficient appliances.
"We are doing it because it is the right thing and it makes economic sense," said Angelides, who has also done residential development in Sacramento.
Canyon Capital has already partnered with former Lakers star Johnson to invest in 30 mixed-use projects in urban neighborhoods valued at about $4 billion. The new partnership with Angelides will "elevate the Canyon-Johnson brand to include the highest level of sustainable development techniques in projects throughout the country," Johnson said in a statement.
Demand for workforce housing should continue to climb, Angelides said, as baby boomers' children enter the job market and urban populations grow through immigration and other means.